Tax Court of Canada


Goods and Services Tax

Zero-rated supplies

Anesthetics in issue supplied by registrant were not designed to serve as emergency relief

Registrant carried on business of selling and distributing dental products and equipment across Canada, including Quebec. During period in issue, registrant supplied dentists with local anesthetic solutions and failed to collect and remit Goods and Services Tax (GST) that Minister alleged was payable by dentists in respect of supplies. Assessment was made pursuant to Excise Tax Act which made adjustments in total amount of $1,111,930.52 to registrant’s reported net tax. Registrant appealed. Appeal dismissed. Section 2(e) of Part I of Schedule VI of Act enumerates list of non-prescription drugs used to treat life-threatening conditions that are zero-rated at all levels of production and distributions. Pursuant to s. 2(e)(x), epinephrine and its salts were zero-rated for purposes of such provisions. Anesthetics in issue supplied by registrant were not designed to serve as emergency relief for patients suffering from major death threatening conditions as required for being listed in s. 2(e) of Act. By allowing epinephrine or any other drug listed in s. 2(e) to be mixed with other substances and to characterize this type of mixture with zero-rating would be contrary to policy established by Department of Finance. If Parliament wished to grant zero-rated status under s. 2(e) to other substances or to mixture of drugs, it should amend legislation.

Patterson Dental Canada Inc. v. The Queen (2018), 2018 CarswellNat 3674, 2018 TCC 112, Réal Favreau J. (T.C.C. [General Procedure]).

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